Title: Investment Options, Assets in Place, and the Risk of Stocks
Abstract:This study views the firm's future investment opportunities as operating options and examines the effect of growth opportunities on the firm's systematic risk using contingent claims analysis. The stu...This study views the firm's future investment opportunities as operating options and examines the effect of growth opportunities on the firm's systematic risk using contingent claims analysis. The study predicts that the greater the portion of a stock's market value accounted for by the firm's growth opportunities, the higher the systematic risk. Overall, our empirical results strongly support this hypothesis. Furthermore, including firm size in empirical analysis does not significantly change the relationship between the stock beta and growth variables. Thus, we conclude that the effect of growth on stock risk is independent of firm size.Read More
Publication Year: 1991
Publication Date: 1991-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 194
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